How wheat became a geopolitical weapon

Vladimir Putin practically not only controls Ukraine’s grain exports, but can also count on the difficulties faced by other exporting countries. Westerners are looking for solutions to get wheat out of Ukraine.

If the question of Europe’s dependence on Russian gas and oil is at the center of the conflict between Russia and Ukraine, the question of wheat is no less sensitive, if not more disturbing.

Thanks to its highly fertile lands, Ukraine in 2018 was the fifth world producer of corn, the eighth producer of wheat, the first producer of sunflower, and the third producer of buckwheat. In general, in the world, 12% of grain exports come from Ukraine. And if we add Russia, which cannot export its grain due to international sanctions, then a third of the world’s wheat comes from the two countries.

pressure method

However, many countries rely heavily on Ukrainian wheat. Its products feed the world market because Ukraine has limited domestic needs and therefore can export on a large scale. theoretically.

The Russian invasion has already completely changed the situation, the Russians have closed the Ukrainian ports, exports are paralyzed: 20 million tons of grain are suspended. The result: wheat prices have increased by 40% since the beginning of the war in Ukraine on the European market (Euronext). A ton is currently trading at 400 euros.

This is enough to raise fears of a severe food and social crisis, especially for countries like Egypt, the world’s largest importer of wheat (50% of its wheat came from Russia and 30% from Ukraine. The country also exports a large part of its wheat and corn production to China and Algeria. and Libya, as well as Tunisia, Morocco and Nigeria.

“We expect social unrest in these importing countries in the coming months,” stresses BFM Business This Friday Arthur Portier, Consultant at Agritel.

Russia has taken this leverage and is now using wheat as a geopolitical weapon to force Western countries to end their sanctions.

Make Westerners bow

Russian President Vladimir Putin said Thursday that he is ready to help “overcome… food crisisCaused by the obstruction of Ukrainian and Russian grain production due to the ongoing conflict, subject to the lifting of sanctions on Moscow.

The Russian president said that Russia is “ready to make a significant contribution to overcoming the food crisis through the export of grain and fertilizer, subject to the lifting of politically motivated restrictions by the West.”

“Vladimir Putin stressed that attempts to blame Russia for the difficulties in delivering agricultural products to world markets are baseless,” the Kremlin said in a statement on Friday.

The head of the Russian state once again noted that “sanctions against Russia by the United States and Europe” are the cause of the food crisis.

Surprising Ally: India

The Kremlin’s strategy is backed by a surprising ally: India. The country is the world’s second largest grain producer (110 million tons last year) but most of its production is for domestic consumption.

At the start of the war, the country said it was exporting little of its production (something it traditionally never does) to relieve importing countries. But in the end he decided to change his mind.

“Unfortunately there was heat wave in indiaThe Minister of Commerce stated that “wheat has shrunk” and production estimates had to be revised downward.

In this context, “we must pay attention to our national food security,” the minister justified, by saying “we do not want people to take advantage of the misery of the poor” by buying and storing large quantities with the aim of returning them. later on the market at much higher prices.

Production declines in other exporting countries

As Arthur Portier, consultant at Agritel explains: “International demand is concentrated on very few exporters, and there is in particular France and the United States that are currently facing difficulties due to bad weather and drought, which increases the price of wheat. There is also Canada, but they are facing Seeding problems.

“Weather takes precedence over geopolitics and drives markets,” he continues.

Europeans are looking for solutions

Westerners are currently looking for solutions to get Ukrainian wheat out of the country and ease the severity of global markets. The Romanian port of Constanta could be one solution, but its capacity is limited to 90,000 tons per day. Above all, grain from Ukraine must be transported by train to this port. However, the scale of railways between Romania and Ukraine varies. It is therefore necessary to unload the grain and reload it on another train: a complex and above all a very long process.

Northern European countries are developing a “goodwill” coalition project in the Black Sea, part of which is under a Russian blockade.

The idea is to escort cargo ships carrying grain from Ukraine on board NATO ships. But this scenario is fraught with danger: what will happen if weapons pass between Russian and Western buildings? Moreover, its implementation depends on the goodwill of Turkey, which controls the maritime movement across the Bosphorus, both in peacetime and in wartime.

At the same time, the German railway company DB, is trying to extract huge amounts of grain from Ukraine via Poland to the ports of northern Germany for export.

Ultimately, Westerners want to combine the two modes of transportation. But nothing says that this will be enough: trains sail much less grain than the giant cargo ships traditionally used. It takes 15 trains to get the equivalent of a freighter.

Oliver Schechbortich BFM Business Journalist

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